On Expanding Public Funding of Selective Colleges

Lutz Hendricks, Tatyana Koreshkova and Oksana Leukhina

No 2025-011, Working Papers from Federal Reserve Bank of St. Louis

Abstract: As college attainment expanded in the U.S., the fraction of public funds allocated to selective colleges and universities declined. Does this make sense from an efficiency standpoint, given that the majority of college entrants face the highest financial returns at selective colleges? Should the states instead be expanding access to high quality colleges? In this paper, we examine reallocating public funds from low quality to high quality colleges in a spending-neutral way. We find that this policy leads to a decline in aggregate earnings and intergenerational income mobility. Public spending on lower quality schools is well-justified.

Keywords: college quality; human capital; public finance of higher education (search for similar items in EconPapers)
JEL-codes: H21 H22 I23 I26 J24 J31 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2025-03-20
New Economics Papers: this item is included in nep-lma
References: Add references at CitEc
Citations:

Downloads: (external link)
https://s3.amazonaws.com/real.stlouisfed.org/wp/2025/2025-011.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:100019

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.2025.011

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().